Carry forward loss

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swasti (Querist)
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05 March 2012 If a company "A" is merged into company "B". As per Sec 47, there is no tax. But is company B eligible to carry forward the business losses of company "A"?

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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05 March 2012 The amalgamated company (Co. B) can set off and carry forward the unabsorbed depreciation and business loss subject to the provisions of Section 72A.

Condition:
1. The amalgamating company (Co. A) should be a company owning an industrial undertaking or a ship or a hotel.

2. The amalgamating company should have been in business for a minimum period of 3 years.

If the above conditions are satisfied, then the unabsorbed dep & business loss shall be treated as depreciation and business loss of CURRENT YEAR.

This will allow the amalgamated company to set off the same against current year income and in case current year profits are not sufficient the business loss can be carried forward for a fresh 8 years.

However, the amalgamated company has to fulfill certain other conditions to avail this benefit.

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swasti

swasti (Querist)
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05 March 2012 Thank you very much Sir.

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